In This essay I will explain the theories of six different economists. The six economists are Thomas Malhtus, Adam Smith, Karl Marx, David Ricardo, John Maynard Keynes, and Henry Ford. Each one of these economists has a unique view on our economy, otherwise known as their theories.
Thomas Malthus was an economist with a soft spot for the poor. Malthus was extremely concerned about the rate of population growth and food production. Malthus concluded that a large portion of humanity was doomed to a life of misery. He opposed legislation to provide relief and housing for those living in poverty. Some people believed such aid would simply encourage the poor to have more children and worsen their lot. Critics believed his theory would only worsen population growth. You can read more about his concerns on population in his famous ‘Essay on Population’.
In 1776 Adam Smith earned the title, “The Father of Economics.” His novel, The Wealth of Nations, was also published this year, which described the main elements of England’s economic system. In Smith’s view, a nations wealth depended on the production of a variety of goods and services. Smith’s overall theory was his belief that the economy would work best if left to function on it’s own without government regulation. Subsequently self- interest would lead business firms to produce them at the lowest possible cost. When people questioned his theory, Smith used the metaphor, “invisible hand,” to explain his regulation. This let individuals and businesses function without interference from government regulation or monopolies. Overall, Adam Smith’s theories, as stated in his novel, are some of the best descriptions of the principles on which we base our political and economics systems.
In the 20th century Karl Marx was considered to be history’s greatest economist. Marx concentrated on the time to find the real reasons why people and nations behaved as they did. He believed that history has been a series of struggles between economic classes. Marx said that the working class would be overthrown by capitalism. This created the social revolution, which would force the rich and wealthy to share. Under capitalism he believed the rich would get richer and the poor would get poorer. Because workers were under paid, they would be unable to buy the goods and services they produced. His theory would allow workers to buy what they themselves produced.
First of all Henry Ford is the creator of Ford cars. His believed in mass production, had socialistic ideas, and paid laborers more than average. His main theory would allow his workers to be able to by a Ford car, which is what they produced. Some more of his theories were that, they can afford to use the full benefits of the division of labor, They can buy in quantities that entitle them to discounts on raw materials, they can afford to purchase specialized machinery and equipment to reduce unit cost, and that they can afford to invest in research and development programs that enable the company to reduce production costs and produce new and improved products. You can all tell that Henry Ford was not an arrogant man.
John Maynard Keynes believed the government should spend some money. If the government spent money Keynes believed there would be no unemployment. This would lead to a resurgence of business activity, and the restoration of full employment. He demonstrated that unemployment could persist indefinitely, unless someone stepped in to increase total demand. Keynes’s book General Theory of Employment, Interest, and Money transformed economic thinking in the 20th century. His book demonstrated that it was possible for total supply and demand to be at equilibrium at a point well under full employment.
David Ricardo is the classical champion of free trade. Free trade is a policy in which tariffs and other barriers to trade between nations are removed. Later, Ricardo developed the principle of comparative advantage. It demonstrated how one nation might profitably import goods from another even though the importing country could produce that item for less than the exporter. An example is: * X barrels of wine are equal to (and therefore trade evenly for) Y yards of cloth. Because of free trade protective tariffs are available, quotas, dumping is available, and other tactics they are extremely useful in today’s economy.
In conclusion, every one of these historical theories lives on in today’s economy as well as our government. I believe the most useful theory’s today are free trade, so that people can produce better products and make a better profit, and Ford’s theory that laborers should be able to buy and own what they produce. Without most laborers we wouldn’t have baggers at the grocery store, mechanics, taxi drivers, or people to make our cars. These are laborers we shouldn’t take advantage of.